Top executives at Donald Trump’s social media company started to become concerned last spring about $8m that they had accepted from opaque entities in two emergency loans when its auditors sought further details about the payments, according to documents, emails and sources familiar with the matter.
The payments had come at a critical time for Trump Media – which runs the Truth Social platform – because it was running out of cash after its planned merger with a blank check company known as DWAC that would have unlocked $1.3bn in capital stalled pending an SEC investigation.
But the financing, which came in the form of a $2m loan from an entity called Paxum Bank registered in Dominica in December 2021 and a $6m loan from an entity called ES Family Trust in February 2022, had been arranged in a hurry and Trump Media knew next to nothing about the emergency lenders.
The executives had good reason to be concerned: a subsequent examination revealed that the trustee of ES Family Trust was simultaneously a director of Paxum Bank, and one of the part-owners of the bank would turn out to be the relation of an ally of the Russian president, Vladimir Putin.
And, months after Trump Media came under criminal investigation for the merger by the US attorney’s office for the southern district of New York, federal prosecutors started to examine whether the company violated money-laundering statutes over the payments, the Guardian revealed on Wednesday.
Around that time, Trump Media’s chief financial officer, Phillip Juhan, weighed returning the money because of the opaque nature of its origins, former Trump Media co-founder turned whistleblower Will Wilkerson recounted in an interview.
But the money was ultimately not returned, Wilkerson said, in part because the $8m represented such a large proportion of the roughly $12m in cash that Trump Media had in its accounts that losing those funds could put the company in a precarious financial position.
The question about who knew about the origins of the $8m that ran the risk of having illegitimate origins because of the Russian connection, and what Trump Media did to ensure that kind of money was not entering the United States has become a key issue arising from the episode.
The implications and, more generally, the optics of Trump’s company borrowing money from potentially unsavory sources through opaque conduits are significant considering they could cast a pall over the former president as he seeks to recapture the White House in 2024.
According to documents and emails reviewed by the Guardian and interviews with multiple people familiar with the payments, the knowledge about the $8m being potentially problematic stretched across a number of top executives at Trump Media.
A lawyer for Trump Media declined to comment on the criminal investigation or the $8m financing. A spokesman for the former president’s son, Don Jr, and the justice department declined to comment.
The first $2m loan was sourced by DWAC’s chief executive, Patrick Orlando just days before Christmas 2021 when Trump Media’s financial situation was becoming increasingly acute. Orlando later charged a $240,000 finder’s fee for the loan to Trump Media, according to an invoice billed through his brokerage firm Entoro Securities LLC.
Even at that stage, there was some concern about the origin of the payment given the fact that it was being routed through an offshore bank and Orlando declined to provide any further information about the lender, telling Trump Media associates that the lender was extremely private.
The financing itself also got approval at the Trump family level, when Don Jr, who had become increasingly involved in the Trump Media deal since the summer when he pushed to renegotiate the licensing deal that Trump had with the company for Truth Social, signed off on the loan.
“Just want to keep you in the loop – no guaranty that these will get signed and funded, but we remain hopeful,” John Haley, outside counsel for Trump Media said in a 24 December 2021 email seen by the Guardian, to which Don Jr replied: “Thanks john much appreciated. d.”
The issue then lay dormant for months until it resurfaced on 8 March 2022, when Trump Media’s CFO Juhan flagged the fact that the company had virtually no information about ES Family Trust and that the entity had never signed the promissory note confirming the loan conditions.
“Our auditors require confirmation statements signed by all noteholders. We don’t have a contact for ES Family Trust other than the name of Angel Pacheco (Trustee). Can you provide contact info (email) so that our auditor (BF Borgers) can email this confirmation? Thanks!” Juhan wrote in the email also reviewed by the Guardian.
It remains unclear what further information, or whether a signed version of the loan agreement, was actually passed on to Juhan or to the auditor.
But in the following weeks, Juhan considered whether to return the money because of its potentially questionable origins, Wilkerson recounted. Whether Juhan consulted with the board – which includes Don Jr, Trump ally Kash Patel and former Republican congressman-turned chief executive Devin Nunes – is unclear.
It was also unclear whether Orlando, a licensed SEC broker-dealer, or the auditor BF Borgers completed any due diligence under anti-money laundering and “Know Your Customer” requirements that mandate vetting of investors to combat the proliferation of illicit money.
A person who picked up the phone at BF Borgers this week put a reporter seeking comment on hold until the line disconnected. On a subsequent call, the person said they would pass the request on to managing partner Ben Borgers. Juhan and Orlando did not respond to multiple requests for comment.
But, Wilkerson recounted, the money was not returned. And by the time that his attorneys Patrick Mincey, Stephen Bell and Phil Brewster alerted the US attorney’s office for the southern district of New York to the payments on 23 October 2022, the links to a Putin ally were evident.